Chancellor admits that Germany has failed and cannot afford welfare state

Germany’s federal chancellor Friedrich Merz (CDU) reinforced on Saturday (08/23) the defense of a reform in the welfare state and ruled out taxes to finance the system.

The statements, made at a party event in Berlin, intensify the conflict with the social democratic party (SPD), a coalition partner, which resists the idea of ​​reducing benefits and prefers to discuss increased high income and equity taxes.

Fiscal pressure and coalition dispute

According to Merz, the current model is “unsustainable” in the face of the growth of public expenses and the deficit in the accounts. He cited the number of 5.6 million Bürgergeld beneficiaries, a program that guarantees minimum income for unemployed, suggesting that part of them would have failed to seek employment due to the benefit.

“You can’t continue like this. We make offers that one or the other looks and says, ‘I would be stupid if I didn’t accept it,” he said.

The SPD, however, is contrary to the proposal of cuts. The deputy chancer Lars Klingbeil stated on the same day that “no option is off the table,” including taxes on big fortunes and higher lace lanes. He defended “structural reforms to stabilize social contributions,” but criticized the idea of ​​reducing the worker protection network.

Impasse on taxes and companies

Merz ruled out any increase in taxation of medium enterprises, considered the engine of the German economy. For him, preserving industrial competitiveness is essential, especially in a context of CDU support for the far right (AFD).

“We want to maintain a critical path to migration and friendly to industry so that Germany will be successfully governed by the Center,” he said.

Positioning puts it directly with SPD sectors, which see progressive taxation a means of supporting social spending without impairing fiscal balance.

Internal tensions and political effects

The theme generates discomfort in social democratic youth, which rejects cuts in retirement, health and assistance. For analysts, Merz’s speech was also a nod to the traditional CDU electorate and the portion of conservatives who migrated to AFD.

Although the CDU -SPD coalition share the diagnosis that social security needs adjustments, solutions presented diverge strongly, increasing the risk of legislative paralysis.

Economic context

Germany faces increasing fiscal challenges, with pressure on budget and population aging that increases social security and health costs. The debate about Bürgergeld has become a symbol of the ideological clash: on the one hand, conservatives call for hardening of the access rules, on the other, social democrats advocate maintenance of the protection network and more taxes to fund it.